Revisions Take the Spotlight

The big news in today's employment report is the revisions to prior months.

The report showed that the economy added 157,000 new jobs last month, about in line with consensus forecasts. The unemployment rate was 7.9%, just a little higher than last month's 7.8% rate. But the job growth for November was revised to up 247,000 from up 161,000 and the change for December was revised to up 196,000 from up 155,000. And in the annual benchmark revision process found 647,000 more jobs in total over the past 12 months, bringing the total number of working Americans to 134.668 million from 134.021 million.

The rest of the report had some mixed elements. The average workweek for production and non-supervisory personnel fell by 0.1 hours to 33.6 hours. There were slight wage gains, as average hourly earnings for this category rose by five cents, and average hourly earnings for all employees rose by four cents. For all employees, aggregate weekly payrolls (combining number of employees, the hours each person worked and how much they earned per hour) rose by 0.4%, which will flow into earnings metrics tabulated in other economic data.

The employment-to-population ratio held steady at 58.6%, just a hair higher than the 58.5% a year ago. In other words, not that many more people as a percentage of the population are working, even though the unemployment rate ticked down to 7.9% from 8.3% from 12 months ago.

Where did all those people go, if not employed? They went into the category of "not in the labor force," whose ranks rose by about 1.1 million to 89.008 million from 12 months ago (these data are not seasonally adjusted). Some, no doubt, are retiring baby boomers, as the population ages. Not all of them fall into the discouraged worker category, as those numbered 804,000, down from 1,059,000 a year ago, posting a drop of 264,000 from a month ago (these data are not seasonally adjusted). The ranks of those marginally attached, such as staying at home with the kids or going back to school, fell by nearly 400,000 from a year ago and by about 170,000 from last month to reach 2.443 million.

The broadest category of unemployment, the U-6 rate, held steady at 14.4%. This rate includes those who are working part time but who want a full-time job as well as those who are discouraged and those who may have suspended their job search while they go back to school or stay home with the kids.

For those who are still looking after six months without work, the number of the long-term unemployed fell to 4.708 million, down from 5.522 million a year ago. These people were 38.1% of the unemployed, down from 39.1% last month and 43.0% a year ago. This seems to be good news, though some of them undoubtedly dropped out of the labor force.

Employment in retail trade rose by 33,000 in January. Another low-wage sector is leisure and hospitality (including food service), which added 23,000 jobs. With about a third of new jobs created in January being in these low wage sectors, on one hand, it isn't encouraging, but on the other hand, some consumers must be shopping and eating out more.

For middle class and higher-skilled jobs, the picture wasn't as rosy. Manufacturing employment was essentially unchanged in January and has changed little, on net, since July 2012. Manufacturing jobs often require more skilled labor and even college degrees for some jobs, perhaps unlike in decades past.